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Amid dizzying wrong-way bets and paltry gains for those with an eye on China and Asia more broadly, funds Sino Vision, Ubiquant, Toroa Management and Long Corridor Asset Management all saw gains exceeding 25% in 2023, according to a report by Bloomberg. 

Their performances last year contrast starkly with a simultaneous 13% decline on the MSCI China Index of equities, as well as underscoring how some funds have delivered for investors despite increasing pressure facing once-dominant China-focused portfolios and Asia funds that capitalised on the world’s second-largest economy.

Sino Vision’s Greater China Market Neutral Fund put up 31.9%, propelled by AI-related bets in Taiwan, but has since lowered its gross exposure to China and Hong Kong since peaking in Q1 of 2022, according to a spokesperson cited in the report, due to fewer attractive opportunities.

Toroa Management’s Master Fund saw a 27.5% return, having relegated China to just one-sixth of its overall exposure as well as pivoting to industries such as advanced manufacturing, energy transition, electrification, automation and software primarily in South Korea and Japan — its biggest return drivers last year. When the $200m firm began trading in Q3 of 2021, its exposure to China was more than 50%. Toroa has also held short positions in suppliers of infant formula and liquor to China as well as real estate investment trusts in Japan.

Long Corridor Asset Management’s Alpha Opportunities Fund gained 26.7%, when about three quarters of its profit drew from trading in Greater China, which include the acquisition of Hong Kong-listed shares of PetroChina and Cnooc. In 2021, the latter was added to a sanction list by the Trump administration, causing international investors to dump their shares. Long Corridor subsequently began to buy Cnooc shares in 2022.

Their boons closely follow the shuttering of Chua Soon Hock’s Asia Genesis Macro Fund just last month, which saw a loss of nearly 19% due to a wrong-way bet that Japanese stocks would underperform Hong Kong and China peers in 2024.

Kirkoswald Asset Management, the London-based investment firm founded by Australian Greg Coffey, has become the latest hedge fund to establish a presence in Abu Dhabi with the opening of a new office in the emirate, according to a report by Bloomberg.

The report cites official records as showing that Kirkoswald established an entity within Abu Dhabi Global Market, the city-state’s international financial centre, late last month, with Matthew Press, Francois Lagrange and David Hassan listed as the company’s directors.

Coffey, who rose to prominence as one of the best performing traders at GLG Partners before setting up his own firm in 2018, joins a growing list of hedge funds operating in Abu Dhabi and neighbouring Dubai including Ray Dalio’s Bridgewater Associates, Izzy Englander’s Millennium Management, and Michael Gelband’s ExodusPoint Capital Management.

A number of buy-side firms including hedge funds, asset managers, and insurance companies are adopting solutions from FIS that are historically aimed at sell-side clients, such as its Cleared Derivatives and Cross-Asset Trading and Risk platforms.

In a press statement, the company said that as buy-side clients face pressures to find new revenue streams, reduce risk, drive operational efficiency, and deliver new value for their customers, it is giving these firms new capabilities via its sell-side solutions.

Historically used by clearing members, FIS’s Cleared Derivatives platform has seen new adoption by hedge funds and other buy-side firms in order to access trading venues and clearing houses directly, in turn helping reduce their counterparty risk and freeing up capital.

Similarly, FIS’s Cross-Asset Trading and Risk platform, which traditionally features sell-side capabilities, is expected to improve asset diversification for buy-side firms as well as scale up new strategies for revenue growth. Buy-side clients have been using the platform for features including real-time controls for trading, order management, profit and loss, and general ledger. In the third quarter of 2023, FIS signed new client contracts for this platform with several buy-side firms.

Derivatives marketplace CME Group is to launch options on S&P 500 Annual Dividend Index futures on 29 January, pending regulatory review, in response to client demand for additional flexibility to customise dividend-related strategies.

The company’s S&P 500 Annual Dividend Index futures traded more than 900,000 contracts in 2023, according to Paul Woolman, Global Head of equity products at CME Group.

The new options contracts are the latest addition to CME Group’s futures offering, which includes S&P 500 Annual and Quarterly Dividend Index futures, Nasdaq-100 Annual Dividend Index futures, and Russell 2000 Annual Dividend Index futures.

Hamza Lemssouguer, a former star trader at Credit Suisse, notched up a 32% return with his $2.7bn Arini credit master fund in 2023, making it one of the top performing credit strategies, according to a report by Bloomberg.

The report cites an unnamed sources with knowledge of the matter as revealing the gain along with a 26.7% gain for the $544m Arini structured credit equity fund, which Lemssouguer started in May.

According to data from Bloomberg, credit hedge fund returns averaged around 8% last year.

Lone Pine Capital, the $15bn Greenwich, Connecticut-headquartered hedge fund firm founded by Tiger Cub Stephen Mandel, bounced back with strong returns in 2023, following a wave of client redemptions and big losses in 2022, according to a report by Business Insider.

The report cites unnamed sources familiar with the matter as revealing that the firm’s flagship Cypress hedge fund strategy notched up a 20% return last year, while its long-only Cascade strategy, which holds the majority of the firm’s assets, returned 32%.

The funds chalked top losses of 38% and 42%, respectively in 2022, while Lone Pine has also faced a wave of client redemptions over the past 18 months, with clients pulling roughly $3bn from the firm in the 12 months ending July 2023, according to data from Bloomberg.

Hedge funds that make money from M&A arbitrage are set to benefit amid signs that the deal activity is beginning to recover after 2023 turned out to be the sector’s worst year for a decade, with deal volume totalling just $2.9tn, according to a report by Bloomberg.

The report cites data from Goldman Sachs Group as revealing an uptick in volume towards the end of last year reflecting the strongest level of activity since the beginning of fee current rate hiking cycle with $869bn of deals in Q4. And according to data from Hedge Fund Research, some event-driven hedge funds also surged in December having endured a difficult year.

Funds to see a revival in fortunes include Michel Massoud’s Melqart, which reversed its first-half loss of 4.4% to end 2023 with a 16% gain, and Kite Lake’s special opportunities fund, which recovered from having lost 5.5% through May to post a 10.7% gain, according to Bloomberg’s unnamed sources.

CastleKnight, an event-driven equity and credit firm started by Appaloosa Management alum Aaron Weitman, meanwhile recorded a 16.5% gain from 2023, having been down 6.5% at the end of May.

Multi-strategy major Citadel has parted company with two of its portfolio managers – Matthew Carter-Tracy and Jospeh DiGiacomo – while another – Ben Shapiro – is rejoining Ken Griffin’s $62bn firm, according to a report by Bloomberg.

The report cites unnamed sources with knowledge of the matter as confirming the departures of Carter-Tracy, who was an energy portfolio manager at Citadel’s fundamental equities business Surveyor Capital, and DiGiacomo, and the arrival of Shapiro, who is set to rejoin the business as a healthcare portfolio manager in May.

According to his LinkedIn profile, Shapiro previously worked for Surveyor between 2015 and 2020, before leaving for Balyasny Asset Management.

Eleven, a fintech providing solutions for hedge and private equity funds, has launched Eleven OS 7, which the company says brings “the new level of simplicity, centralisation, data transparency and data integrity to the global private investment process”.

At the core of Eleven OS 7 are Investor Profiles – secure repositories utilised for completing fund subscription documents, onboarding for KYC and AML and servicing investors. Eleven says the true power behind Eleven OS 7 lies in its ability for investors to maintain and update Investor Profile information across investments.

Eleven OS 7 facilitates changes to information, such as banking or address details, with an intuitive and centralised workflow, while accommodating the diverse, complex and decentralised data requirements, approval processes, and workflows connected to each investment.

The incorporation of environmental and social metrics into investment strategies is becoming increasingly common among hedge fund managers, according to a report by Bloomberg citing research by analysts at UBS Group.

The report cites a note published by the company’s Global Wealth Management business on Wednesday as saying that:
“Hedge funds have continued to step up sustainability integration into investment strategies,” and that there is also “a subset pursuing dedicated sustainable investment deployment via equity long/short and credit strategies, mostly within thematic equities and green, social and sustainable bonds.”

And with the prospect of lower interest rates in 2024, a recovery in green assets is expected to follow which, according to UBS, should in turn “increase confidence for business investment in areas tied to sustainability”.